A Plan to Reduce the Deficit
Finally we woke up and realized that spending binge leads us to disaster. But what’s the solution. Taxing the wealthy and our economy? Slashing the entitlement programs for the poor? Nothing is appealing, neither is it realistic to expect in the current political environment.
I thought of a plan that I haven’t seen yet, that can reduce our chronic deficits, while ensuring equality in our taxing and entitlement system. In addition, it will create incentives for our citizens to earn, instead of punishing our hardest workers.
The Dire Situation of the So-called Middle Class
Under the current system, our Middle Class is the most impoverished sector. They are getting punished for bringing home a pay-check.
Am I exaggerating? See yourself the breakdown below, describing two families of 4 in Brooklyn, NY – it compares a so-called middle income family, versus a low-income family.
It shows that a family of 4 working for about $200 weekly can end up with an income of $55,029. The same family composition working hard and earning about $770 weekly, will end up with a meager $41,456, and this is before taxes bites in.
Family of 4, earning $10,500
Monthly Annually
Section 8 rent subsidy
(Eligible for 3 Bedrooms if it’s boy and girl – the tenant would have to pay less than $3,000 a year out of their pocket. Thus, I calculate the annual sum to $20,000)
$1,899 $20,000
Food Stamps $588 $7,056 http://home2.nyc.gov/html/hia/html/other/benefits_food_stamps.shtml
Medicaid FHP (Value) $1,000 $12,000
State and Federal EIC tax credit $5,473
(NY State EIC is 30% of the federal Credit) http://memphis.earnbenefits.org/page.php?pageID=244
Total: $3,487 $44,529
Total Government & personal income $55,029
Family of 4, earning $40,000 annually receives:
Section 8 rent subsidy $0 $0 http://www.nyc.gov/html/nycha/html/section8/section8-incomelimits.shtml Maximum income $35,450
Maximum income $27,564
Medicaid FHP (Value) 0 0 http://www.health.state.ny.us/nysdoh/fhplus/who_can_join.htm
Maximum income $33,535
State and Federal EIC tax credit 0 0 $1,456
Total Government & personal income $41,456
This is outrageous. We are penalizing working family. This discourages people from accepting pay-raises. They don’t want to hit the entitlement cap, and losing their MAIN INCOME. And they’re right: it’s ridiculous to work much harder, and earn much less.
This is discouraging people from working and being productive, and it’s destroying our economy.
Logically, if the middle class is expected to survive on their income, why do we hand out higher sums to the low income?
Can anybody explain why government entitlement is not taxes as hard-earned money, especially when the beneficiaries fare better than middle class family, as shown above?
Solution
A fair solution will be, that entitlement programs should be considered an income when determining eligibility for other subsidies (i.e. when you have section 8 and apply for food stamps, your voucher amount will be included in your income to determine if you are still eligible and how much you’ll receive), and they should be taxable.
This will free more money from the system to enable us to raise the cap to qualify for these programs, thus shifting the pot to those with modest incomes who are crushed by the current system. Part of the savings should also be used to reduce the deficit.
This plan will stop punishing working people, it will ensure equality between are Poor Middle class and wealthier low-class, it will save us huge sums of money, and it will encourage the lowest earners to climb up the income ladder.
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